06Jan13

Air France-KLM in advanced talks for Alitalia: report

Franco-Dutch carrier Air France-KLM (AIRF.PA) is in "advanced" talks to take
control of Italy's flagship airline Alitalia by the summer, Rome's Messaggero
newspaper reported on Sunday without citing its sources.

Alitalia is owned by CAI, a consortium of investors that bought the then-bankrupt
airline in 2008. CAI is already partly owned by Air France-KLM. Alitalia's
shareholders can exercise options to trade their shares when a lock-up period ends
on January 12.

In May, Air France said it would probably wait until at least 2014 before using its
option to take control of Alitalia, in which it has held 25 percent since January 2009.

Air France-KLM has offered shareholders a 20 percent premium on what they paid
for the airline in 2008, the newspaper said, probably in Air France-KLM shares. CAI
paid a little more than 1 billion euros to take over Alitalia five years ago.

An Air France-KLM spokesman in Paris declined to comment on the report. Officials
at Alitalia did not answer repeated phone calls.

But four-time Prime Minister Silvio Berlusconi, who scuppered Air France-KLM's last
attempt to buy Alitalia, said he was still against the airline's sale. Berlusconi is badly
behind in the polls ahead of a February 24-25 national election.

"Our country cannot afford not having its own flagship airline," Berlusconi said on
his Facebook page. "If Alitalia had fallen into the hands of the French... many
tourists would have ended up visiting the castles in the Loire valley instead of our
cities of art."

Berlusconi won the parliamentary election in 2008 promising to keep Alitalia out of
foreign hands and to clean the trash off the streets of Naples. He is trailing by more
than 10 percentage points, polls show.

Alitalia returned to profit in the third quarter after reporting losses in the first half,
booking a net profit of 27 million euros ($35.2 million), down from 70 million euros a
year before.

Net debt rose to 923 million euros at the end of September, up by 61 million euros
from the end of June. ($1 = 0.7666 euros)

[Source: Reuters, Roma, 06Jan13]

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